How to raise revenue by lowering taxes?

Taxes: not many people like to talk about them and even fewer like to pay them. But if we are to improve Jackson, it’s time to have serious discussion.

First, if Jackson is to improve public safety as well as improve infrastructure, more money is needed. There are only two ways to get more money, the first being to reallocate money from other resources and spend more wisely, the second is to increase the city’s tax revenue. While I clearly support wise spending habits, I think we cannot make Jackson into the finest city in the southeast without increases in revenue.

The conventional wisdom states that raising taxes would accomplish this. And the conventional wisdom is wrong.

I want to raise city revenue by lowering tax rates. To understand how that is possible, first we must understand how the city generates revenue.

Jackson has multiple revenue streams, but by far, the largest two are property taxes and sales tax which make up 44% and 27% of total revenue respectively. The question I ask, is: Can we increase overall revenue by decreasing the tax rate? The answer is yes.

Over the last several years, multiple residents and businesses have left Jackson to move to the surround cities and counties. As well as losing vibrant and interesting people, the city also loses their money. A relatively small percentage of the lost revenue is from lost property taxes. A much higher percentage of lost revenue is from decreased spending in the city which results in decreased sales tax.

I propose decreasing the property taxes for businesses to operate in the city. This can be accomplished by decreasing the overall tax rate, or better yet, by granting a several year tax incentive/rebate for companies that relocate into Jackson. While the city will not be generating as much revenue from the property taxes as they otherwise would, they still will increase property tax revenue as businesses that once were outside of the city, now move into the city. More importantly, the city will start generating revenue on all the sales from those businesses.

There is a state sales tax of 7%. The city keeps 18.5% of all sales tax collected in the city, or 1.295% of total sales.

To exemplify this, let look at the recent move of Barnes & Noble from the shopping center on County Line road in Jackson to the Renaissance shopping center in Ridgeland. Using data from the 2007 B&N annual report, average store sales for the year were $5,656,250. So in 2007, the city of Jackson made $73,248 just from a single Barnes & Noble business. And in 2008, the city lost that revenue.

Jackson needs to become pro-business. We need to attract businesses and help them become successful because the more successful they are, the more Jackson profits.

I think I’ve written enough, but don’t worry, more to come on this topic soon. Keep checking back.